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The reverse mortgage is a type of loan that can turn the home you own into a nice monthly income. There have been many talks about these types of mortgages and everyone has different opinions. They can come very handy for some people yet not everyone may profit from them. If you consider making such a loan, then you should first make sure you are fully aware of what they involve regardless if it’s good or bad.

The good characteristics of these types of mortgages are some of the following:

• You are granted a steady income of money for as long as you live.

• You can keep your home and live in it.

• Full ownership of the house is not required in order to be able to receive a reverse mortgage.

• You can repay the loan without having to give away your home.

• The borrower stays entitled to his home.

• The only criteria that are taken into account for this type of loan are home equity, health, age and home value.

• The borrower has the options to receive his money in full, make a credit line, get them in monthly payments or even a mix of these three ways.

• The borrower cannot owe the lender a sum larger than the value of his home at any given time.

• When the repayment day comes, the borrower’s heirs are entitled to the difference in the event that the mortgage balance is lower than the value of the borrower’s home.

• Being engaged in a reverse mortgage does not affect the borrower’s social security and Medicare.

• Reverse mortgages do not require monthly payment as in the case of home equity lines of credit.

The not-so-good things about reverse mortgages are:

• Only people with the age of 62 or older are eligible for this kind of loan

• Home repairs, property taxes and insurance are still the borrower’s concern.

• If the borrower deceases, sells his home or he doesn’t use it as his primary home, then the lender will ask for the loaned money back.

• Can affect the borrower’s potential to receive Supplemental Social Security or Medicaid benefits.

• It is more costly and demanding compared to a home equity line of credit.

• The borrower needs to have a meeting with a HUD counselor before getting the loan

• The sum that the borrower can take out is limited

• The borrower’s heirs need to pay off the balance together with the interest when the loan expires

• Any balance from any previous mortgage will be added to the balance of the reverse mortgage

• In time, it lowers down your home’s value.

• These types of mortgages can be very costly, with high interest rates and high insurance expenses.

Related Links:

• About Reverse Mortgages
• Reverse mortgages – Federal or Private?
• Reverse Mortgages – Typical usage
• What is a Second Mortgage
• Home Mortgages
• Mortgage Refinancing
• About Home Equity Lines